Can You De-Risk Your Portfolio by Investing in Diversified Mining Companies During the Great Transition?

Jessica N. Abraham

DISCLAIMER: The author of this article holds stock in one or more of the above companies mentioned above and regularly does her due diligence to understand each of those companies, the markets they serve, their impact on the environment and their individual competitive landscapes. This article is meant to inform and educate. It does not and should not constitute financial advice, as the author believes it is ultimately up to the reader to conduct his or her own analysis before making any investment into any company either now or later.

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As the global community pulls together to create plans for a net-zero transition towards decarbonization, governments have been establishing executive orders relating to the adoption of electric vehicles (EVs) and hybrid cars.

Starting this year, countries, such as the United Kingdom, require all new houses built to have some sort of EV charging station attached on the outside. And companies operating in the design and production of electric vertical take-off and landing (eVTOL) aircraft, such as Joby Aviation Inc. (NYSE: JOBY) and Embraer SA (NYSE: ERJ), are racing to become the first to deliver air-taxis, chartered by crowdsourcing applications to various metropolitan areas across the globe.

While experts foresee global carbon emissions cut in half by 2030, most countries banning or slowing down the sale of gas-powered internal combustion engine (ICE) vehicles by 2035 – most countries will be at "net-zero status” by no later than 2050, a period of time, where others foresee a trend towards net-negative carbon emission.

In a recent article with Seeking Alpha, finance writer Austin Craig outlined the following trends in the EV sector:

  • Unconfirmed reports place Ford Motors (NYSE: F) investing $40-50 billion into EV.
  • A Porsche (OTCMKTS: POAHY) Taycan goes coast to coast on 2.5 hours of charging.
  • Bridgestone Corp. (OTCMKTS: BRDCY)-Firestone offers on-site charging stations.
  • LG Energy (KRX: 373220) plans to spend $1.7 billion on a battery factory in the US (They’re already part owner of Ultium Cells, LLC – a joint venture with GM – based in Lordstown, Ohio).
  • Glencore & Britishvolt to build lithium/cobalt recycling plant in the U.K.
  • The U.S. government plans to put $5 billion into EV chargers nationwide over five years. An additional $2.5 billion will be released later on, for a total of $7.5 billion.
  • EV trends show that models will double by 2024.

Let’s not forget to mention Ford’s plan to unleash 150,000 models of just the Ford F-150 Lightning, year-over-year, and its recent partnership with SunRun (NASDAQ: RUN) to add solar charging options to its vehicles, or The General Motors Company (NYSE: GM) announcement that the company would begin exploring alternative charging solutions, primarily using hydrogen fuel cells, but would not start rolling out a product until the end of 2026.

Another company, Worksport Ltd. (NASDAQ: WKSP) and its subsidiary Terravis Energy plans to release its own non-parasitic hydrogen and solar products by the end of Q2 2022, accelerating the emerging portable energy market with cutting-edge technology that would serve both the EV and sustainable energy sectors.

All of this will lead to the growing price of lithium and quite possibly nickel, copper and graphite – all of which are listed as critical minerals by the United States. It could also mean a potential shortage of battery materials if no solution is found for ongoing supply chain issues, initially caused by the 2020 Covid-19 pandemic. An ongoing dispute between the native population in Thacker Pass, Nevada and the Lithium Americas Corp. (NYSE: LAC) does not help this equation and only makes matters more stringent.

According to the International Energy Agency Global EV Outlook 2020, by the year 2030, the demand for EV batteries will increase by more than 900% compared to today. The firm breaks down these figures in its newest 2021 report, raising its projections just a bit further to compensate for growing demand.

From the perspective of government, U.S President Joseph Biden’s climate change plan promises a $2 trillion investment in clean energy and has shown his support of the development of domestic production of EV batteries.

The Biden Administration promises a $2 trillion investment in clean energy, and the European Commission backed a Green Deal in December 2019, intending to meet net-zero carbon emission by 2050.

If supply chain shortages and industrial tariffs continue to be placed on the necessary materials for EV battery productions, who will supply the essential battery metals needed by EV and sustainable energy companies across the continent?

One company is stepping in with a clear and competitive environmental advantage.

Surge Battery Metals Inc. (TSXV: NILI) (OTCQB: NILIF) is a Canadian-based lithium, nickel and copper metals exploration company exploring battery metal exploration targets in world-class mining-friendly jurisdictions and key areas across Canada and the United States. The company focuses on locating and developing high-value clean energy battery metals deposits vital to the rapidly growing electric vehicle (EV) market.

These metals are also widely used in medical equipment, uninterruptible power sources (UPS), safety alarms, tracking systems and automobile accessories. Industrial variants are evolving. Because of this, many of them have a much longer span of life and can be operated in extreme environmental conditions. This includes access in remote locations and the extensive use of energy in grid storage, utility and telecommunications-based systems.

British Columbia, Canada, is considered one of the most suitable places for metal mining with the most skilled laborers and equipment. And Nevada, U.S.A. was ranked as the #1 mining jurisdiction in the world for what the Fraser Institute calls an “investment attractiveness,” British Columbia, ranked #17. As a result, both locations are primary targets for Surge Battery Metals and key areas where the company operates, alongside its partners in mining and excavation.

To date, a more prominent global battery metals market is forecasted by the rapidly rising demand from the EV industry. As a result, the global EV battery market is expected to reach $ 28.68 billion by 2027, exhibiting a compound annual growth rate (CAGR) of 6.3% from 2022 through 2027. The global battery chargers market is also on course to reach $32 billion by 2026. And the company plans to capitalize on its exploration of nickel, lithium and copper byproducts, which are widely used in batteries for EVs.

Nevada is currently America’s only lithium-producing state – and vital in creating a domestic, North American supply chain. And at several locations in British Columbia, adjoin directly with world-renowned projects, such as the FPX Nickel Baptiste Project, which is documented as a tier-1 asset with sizable bodies of ore.

The EV battery market is primed to take off but may experience slight turbulence due to EV demand and innovative power disruptions.

In January, CleanTechnica reported a 29% share of the European Electric Car Market, as sales exploded to impressive new highs. Battery electric vehicles (BEVs) held 19% of the market alone. In addition, plugin hybrid electric vehicles (PHEVs) outperformed the 2020 market by more than 2 million new vehicle sales.

In December alone, the electric car market recorded 181,641 newly registered electric vehicles – 65% of the overall electric vehicle market.

According to BloombergNEF, global EV sales were on track to hit 6.3 million units in 2021, doubling from that of 2020.

Earlier this year, lithium markets in Asia also saw a gain of 400%. Bloomberg reports that “Chinese lithium carbonate prices tracked by Asian Metal Inc. rose to a fresh record (January 2022), as data showed a 35% month-on-month jump in electric-vehicle registrations in December (2021).” with more than 400,000 new electric vehicles registered in China that month.

“BloombergNEF predicts a 2% rise in battery pack prices this year, potentially pushing out the point at which electric vehicles will reach cost parity with conventional cars to 2026, two years later than its earlier forecast,” the article continues.”But with lithium prices blowing past previous records, there’s a growing risk that raw-material inflation could soon create headwinds for the burgeoning industry.”

In relation to copper, on the other hand, “Light-duty electric vehicles with battery packs of up to 100kWh use three to four times the amount of copper of gasoline and diesel-powered equivalents,” writes Frik Els of Mining.com, “This is 80-85kg in the high-voltage batteries and motors of EVs compared to 20-25kg for low voltage wires in internal combustion-engined cars.

Els also notes that Wood Mackenzie, an energy and metals researcher, expects end-use copper demand from passenger EVs (including hybrids) to jump to around 2.9 million tonnes over the next decade from roughly 600,000 tonnes in 2021, which compares to an annual mined production of almost 21 million tonnes and total copper scrap use of close to 6 million tonnes.

Lithium batteries can hold up to 150 watt-hours (WH) of energy per kilogram (kg) compared to nickel-metal hydride batteries at 60-70WH/kg and lead-acid batteries at 25WH/kg. They also have a lower discharge rate than other batteries in their class, losing about 5% of their charge in a month, compared to nickel-cadmium (NiMH), which tend to lose upwards of 20% of charge over the same period.

Battery Universe makes a sound case that “Nicad batteries are good for working in extreme environments, such as cold or hot weather. They also have a longer life cycle than NiMH or Li-ion, with about 700-1000 life cycles. As a result, they are very robust for high output deep discharge applications.”

At the same time, nickel makes up as much as 80% of the material that goes into EV batteries. At the end of 2021, the United States added nickel to its critical minerals list, as it is now deemed critical in the future of the U.S. economy, global technologies and the companies that use such minerals for production.

The problem is that there’s a shortage of pure nickel, and extraction often means mining for hybrid nickel byproducts.

While lithium is its primary commodity and exploration sites just miles down the road from Tesla’s (NASDAQ: TSLA) Nevada Gigafactory 1, Surge Battery Metals also explores nickel and copper, which are also in demand for battery production. On its own, nickel is now considered a rare commodity, with 42% of all nickel mined in Canada’s BC province.

Surge Battery Metals owns a 100% interest in 95 mineral claims located in Elko County, Nevada. The Northern Nevada Lithium Project is located in the Granite Range, southeast of Jackpot, Nevada and north-northeast of Wells, Nevada. The target is a Thacker Pass or Clayton Valley type of lithium clay deposit in the volcanic tuff and tuffaceous sediments of the Jarbidge Rhyolite package. The company acquired 38 additional material claims in June of 2021.

A diversified portfolio allows investors to minimize their risks.

The Visual Capitalist highlights that in the first week of 2022, prices for lithium carbonate reached a new high of 300,000 yuan (nearly $47,500 USD) in China per ton. Lithium carbonate is considered a key ingredient in lithium iron phosphate (LFP) batteries. It had been downtrending from its previous highs in 2016 and 2017, skyrocketing almost 497% before finding its footing with a six-fold increase in price and demand.

A tightening squeeze in the nickel market is said to be getting worse. Earlier this month, Bloomberg reported that contracts for the immediate delivery of metals are trading at a $570-a-ton premium to those in three months. The outlet went on to point out that this was the highest such premium since a historic squeeze in 2007 and that the market is now pricing in tighter nickel supplies for longer, amid strong demand from stainless steel producers and battery manufacturers.

Surge Battery Metals is uniquely positioned to bring peace of mind to commodity investors because the company isn't attached to just one or two sites – or even one metal or mineral type. In fact, the company has assembled an impressive portfolio of battery metal targets in multiple counties and mining-friendly jurisdictions across North America, which are quite comparable to that of the other single target exploration companies in the industry. It constantly seeks out targets to explore, growing a portfolio of landmasses for future partnerships and mining collaborations.

These green metals have rapid demand growth forecasts that are positioned to outperform in the market.

The company’s four exploration targets offer investors diversity and significant risk reduction. It’s currently focused on and fully operating two major non-contiguous nickel exploration programs in Canada, including the Hard Nickel Program and the Nickel 100 Group. The company also has two high-value target lithium exploration projects, including the Northern Nevada Lithium Project and the San Emidio Lithium Project. In British Columbia, the company has a Copper project in Caledonia.

As it stands, none of the projects have any known environmental liabilities or exploration permits in arrears. This, among many other reasons, is why one should consider investing in a low-risk company like Surge Battery Metals, Inc. (TSXV: NILI) (OTCQB: NILIF). As the world “surges” ahead towards forward mobility, mineral exploration is imperative to the future demand of battery development, as metals become a number one commodity in a shifting market.

For more information on Surge Battery Materials and what they’re currently doing by way of mining and materials exploration, visit https://surgebatterymetals.com, for details on specific projects check out the report here. For more information on why you should consider Surge Battery Materials, click here.

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Jessica N. Abraham is a writer, designer and publicist, specializing in Business, Technology and the Jobs Industry. https://www.jessicanabraham.com | contact@jessicanabraham.com | Twitter: @jessicanabraham

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